By Adedapo Adesanya
Oil futures shed the new week gains on Wednesday after data released by the United States government showed that domestic crude supplies rose by nearly 8 million barrels, indicating a growth for a second consecutive week.
Brent crude which was promising to hit the $63 mark fell by 1.73 percent or $1.09 to trade lower at $61.87 per barrel as at the time of this report on Wednesday night, while the US West Texas Intermediate crude lost 1.29 percent or 74 cents to settle at $56.49 per barrel.
The Energy Information Administration (EIA) on Wednesday reported that US crude supplies climbed by 7.9 million barrels for the week ended November 1. Analysts had earlier predicted that crude supplies would increase by 2.7 million barrels, according to a poll set up by S&P Global Platts.
On the other hand, the American Petroleum Institute (API) on Tuesday reported a rise of roughly 4.3 million barrels in crude inventories.
Oil prices were also dealt a huge blow after Reuters reported that a meeting between the presidents of the United States and China to sign a the confusing interim trade deal could be extended until December as discussions continue after the venue was changed due to heavy protests.
Also, contributing to the weak performance was the International Monetary Fund (IMF) as it said that euro zone economic growth was set to slow more than expected as the manufacturing crisis in Europe could affect the larger services sector under global trade tensions.
It was also disclosed that Germany, Europe’s largest economy services sector suffered inadequate growth in October, while euro zone business activity expanded slightly faster than expected but remained close to stagnation.
Reports also held back Investors on Wednesday as the Organisation of the Petroleum Exporting Countries (OPEC) and its allied producers noted that the biggest producers in the group won’t push for deeper oil supply cuts when they meet next month in Vienna.
It was said that the member states and allies may stick to their current output targets and encourage producers to comply more fully with those targets.
Business Post understands that a better outlook for crude prices are banking on US-China trade talks advancement in November. According to market specialists, in the event of a signed deal, this would help to restore some measure of global demand as economic and trade conditions will recover.
Modupe Gbadeyanka